Investment Rating - The report assigns a "Buy" rating to Huazhu Group-S (01179) for the next 6 months [1] Financial Performance - Q2 2024 revenue reached RMB 6.15 billion, up 11.2% YoY [1] - Net profit attributable to shareholders was RMB 1.1 billion, increasing 5.1% YoY [1] - Operating profit margin improved to 25.6%, up 0.6 percentage points YoY [1] - Domestic hotel revenue grew 11.1% YoY to RMB 4.8 billion [1] - Deutsche Hospitality revenue increased 11.6% YoY to RMB 1.3 billion [1] - Direct-operated revenue rose 2.5% YoY to RMB 3.7 billion [1] - Franchise revenue surged 25.8% YoY to RMB 2.3 billion [1] Operational Metrics - Domestic RevPAR declined 2.0% YoY to RMB 244, with recovery rate at 118.4% compared to 2019 levels [1] - Domestic ADR decreased 3.0% YoY to RMB 296, representing 125% of 2019 levels [1] - Domestic occupancy rate improved 0.7 percentage points YoY to 82.6%, reaching 95.1% of 2019 levels [1] - Deutsche Hospitality RevPAR increased 4.5% YoY to €82, with recovery rate improving 17.2 percentage points to 115% [1] Expansion Strategy - Opened 572 new hotels in Q2 2024, including 567 domestic properties [1] - Achieved 64% of annual new hotel target in H1 2024 [1] - Total domestic hotel count reached 10,150, with 136 international properties [1] - Raised full-year new hotel guidance to 2,200 from previous 1,800 [1] Valuation and Outlook - Forecasts net profit of RMB 4.0/4.6/4.9 billion for 2024-2026 [1] - Current PE ratios stand at 24x/21x/20x for 2024-2026 [1] - Expects Q3 2024 revenue growth of 2%-5% [1] Industry Analysis - The company operates in the non-essential consumer sector, specifically tourism and leisure facilities [1] - Huazhu Group demonstrates leading scale advantages and operational efficiency in the hotel industry [1]

Investment Rating - Maintain "Buy" rating for Huazhu Group-S (1179 HK) [1] Core Views - Huazhu Group demonstrated resilience in Q2 2024 with revenue of RMB 6 15 billion (+11 2% YoY) and net profit attributable to shareholders of RMB 1 067 billion (+5% YoY) [1] - The company achieved a milestone of 10 286 global hotels with 10 150 under the Huazhu brand including 9 558 franchised hotels [1] - Huazhu Group announced a 3-year shareholder return plan including up to $2 billion in dividends and a $1 billion share repurchase program [1] Financial Performance - Q2 2024 revenue reached RMB 6 15 billion (+11 2% YoY) at the upper end of guidance [1] - Net profit attributable to shareholders was RMB 1 067 billion (+5% YoY) [1] - EBITDA reached RMB 1 9 billion with adjusted EBITDA of RMB 2 billion (+11% YoY) [1] - Huazhu brand contributed RMB 1 033 billion in net profit (+4% YoY) while DH segment contributed RMB 34 million (+54 5% YoY) [1] Expansion and Market Position - Total hotels reached 10 286 globally with 10 150 under Huazhu brand [1] - 567 new hotels opened in Q2 with net openings of 466 [1] - Pipeline hotels increased to 3 258 [1] - Full-year new hotel opening target raised from 1 800 to 2 200 [1] Operational Metrics - Huazhu brand RevPAR was RMB 244 (-2% YoY) with OCC of 82 6% (+0 7pct YoY) and ADR of RMB 296 (-2 9% YoY) [1] - DH brand RevPAR was €82 (+4 5% YoY) with ADR of €120 (+2 7% YoY) and OCC of 68 3% (+1 2pct YoY) [1] - Q3 2024 revenue growth guidance of 2-5% [1] Shareholder Returns - 3-year shareholder return plan announced with up to $2 billion in dividends [1] - Semi-annual dividends with annual payout ratio of at least 60% of net profit [1] - $1 billion share repurchase program approved effective August 21 2024 [1] Financial Forecasts - 2024-2026 revenue forecast at RMB 23 396 million RMB 24 774 million and RMB 25 953 million respectively [2] - 2024-2026 net profit forecast at RMB 4 165 million RMB 4 438 million and RMB 4 711 million respectively [2] - 2024-2026 EPS forecast at RMB 1 30 RMB 1 38 and RMB 1 47 respectively [2] - 2024-2026 PE ratios forecast at 16x 15x and 14x respectively [2] Valuation Metrics - Current price: HK$22 65 [2] - 2024-2026 PB ratios forecast at 4 1x 3 2x and 2 6x respectively [2] - 2024-2026 EV/EBITDA ratios forecast at 11 46x 10 79x and 10 19x respectively [6]

Investment Rating - The report maintains a "Buy" rating for Huazhu Group-S (01179 HK) and Huazhu (HTHT O) [4] Core Views - Huazhu Group reported strong Q2 2024 results with revenue of 6 15 billion CNY (+11 2% YoY) and adjusted net profit of 1 25 billion CNY (+16 9% YoY) [1] - Domestic occupancy rate (Occ) outperformed ADR while international markets saw growth in both volume and price [1] - Operational efficiency improved with reductions in rent depreciation and consumables costs [1] - The company achieved a milestone of 10 000 domestic hotels and raised its full-year store opening guidance from 1 800 to 2 200+ [1] Financial Performance - Q2 2024 domestic RevPAR was 244 CNY (-2% YoY) with ADR at 296 CNY (-3% YoY) and Occ at 82 6% (+1pp YoY) [1] - International RevPAR grew 5% YoY to 82 EUR with ADR at 120 EUR (+3% YoY) and Occ at 68 3% (+1pp YoY) [1] - H1 2024 revenue reached 11 43 billion CNY (+14 1% YoY) with adjusted net profit of 2 03 billion CNY (+39 0% YoY) [1] Store Expansion - Q2 2024 saw a net increase of 466 domestic hotels (567 new openings) bringing the total to 10 150 [1] - The pipeline of hotels under development increased to 3 294 (3 266 domestic) up by 156 from Q1 2024 [1] - H1 2024 saw 1 136 new openings with 1 064 remaining to meet the revised full-year target [1] Valuation and Forecast - The report forecasts 2024-2026 net profits of 4 2/4 8/5 4 billion CNY respectively [2] - A 24x PE valuation for 2024 implies a fair value of 35 29 HKD/share for HK-listed shares and 45 38 USD/ADS for US-listed shares [2] Financial Ratios - 2024E revenue growth is projected at 10 7% with EBITDA of 7 287 million CNY [3] - ROE is expected to be 25 6% in 2024E declining to 19 9% by 2026E [3] - Net profit margin is forecasted at 17 5% in 2024E increasing to 18 8% by 2026E [3]

Investment Rating - The report assigns a rating of "Accumulate" for the company [4][5]. Core Insights - The company's performance meets expectations, with macroeconomic fluctuations causing a slowdown in growth. However, the company has raised its store opening guidance, indicating an expansion in market share [4][5]. - The adjusted net profit for 2024 has been increased to 4.488 billion RMB (+2.58 billion), while the adjusted net profit for 2025 and 2026 has been lowered to 4.978 billion and 5.943 billion RMB respectively [5]. - The target price is maintained at 42.50 HKD based on an industry average PE of 25x for 2025 [5]. Financial Summary - Revenue for 2023 is projected at 21.882 billion RMB, with a year-on-year growth of 57.86%. The adjusted net profit for 2023 is expected to be 4.085 billion RMB [4]. - The company’s revenue for Q2 2024 is reported at 6.148 billion RMB, reflecting an increase of 11.18%, with adjusted net profit at 1.254 billion RMB (+17.42%) [5]. - The RevPAR for Q2 2024 shows a slight decline of 2.0% year-on-year, with ADR down by 2.9% and occupancy rate up by 0.7 percentage points [5].

浦银国际研究 公司研究 | 消费行业 华住集团（1179.HK/HTHT.US）：境内业 务高基数下增长放缓，上调开店指引 2Q24 在高基数下达成收入指引上沿：尽管面对高基数影响，华住集 团 2Q24 仍达成了公司的收入增长指引的上沿（营收同比增长 7%- 11%）。2Q24 集团营收为人民币 61.5 亿元，同比增长 11.2%，不包括 境外业务（Legacy DH）营收同比增长 11.1%。2Q24 经调整归母净利 润实现 12.5 亿元，同比增长 16.9%。 境内经营指标有所转弱，但好于市场：华住集团 2Q24 境内业务 （Legacy-Huazhu）RevPAR 为 244 元，同比下降 2%。其中，ADR 同比 下降 3%，主要是由于上年爆发式出行以及酒店行业供给不足拉高了 基数，而公司 OCC 同比提升 0.7ppt，抵消了部分 ADR 下降的负面影 响。管理层表示，今年 7-8 月在市场 RevPAR 下降 10%的情况下，华 住 RevPAR 同比仅下降中个位数，跑赢市场。我们认为，在高基数、 恶劣天气和宏观环境不振的情况下，酒店行业 2024 年 RevPAR 同比 下降的趋势较难逆转， ...

证券研究报告 | 2024年08月22日 华住集团-S（01179.HK） 优于大市 二季度经调整净利润增长 17%，上修全年开店指引 2024 年第二季度收入增速处此前指引上限，经调整净利润同增 17%。2024Q2， 公司收入 61 亿元/+11.2%，处指引上限（7-11%）；其中来自境内华住的收 入 48.3 亿元/+11.1%（此前指引 7-11%）；DH 收入 13.2 亿元/+11.6%。Q2 归 母净利润 10.67 亿元/+5.1%，经调整净利润 12.54 亿元/+16.9%，经调整 EBITDA 20.4 亿元/+15.1%，国内/海外经调整 EBITDA 各+14.0%/35.1%。 第二季度公司国内 REVPAR 同比-2%，环比走弱，但仍优于行业平均。2024Q2， 境内综合 RevPAR 同比-2%，其中 ADR-2.9%，OCC+0.7pct；同店 RevPAR -3.6%； 环比 Q1 综合/同店+3.1%/+0.9%走弱。但参考酒店之家等行业数据，2024Q2 国内酒店 REVPAR 下滑约 7-8%左右，公司 Q2 同店 RevPAR 在高基数下仍优于 行业整体，彰显公司 ...

证券研究报告 港股公司|公司点评|华住集团-S（01179） 收入处于指引上限，上调全年开店目标 请务必阅读报告末页的重要声明 glzqdatemark1 2024年08月21日 证券研究报告 |报告要点 我们预计公司 2024-2026 年营收分别为 242.4/260.5/280.3 亿元，对应增速分别为 10.7%/7.6%/7.6%；归母净利润分别为 42.5/49.1/56.7 亿元，3 年 CAGR 为 11.6%，对应 PE 分别为 15x/13x/11x。鉴于公司龙头地位稳定，品牌、运营实力强劲，国内门店下沉、品牌向 上与全球化仍有较大空间，维持"增持"评级。 |分析师及联系人 邓文慧 曹晶 SAC：S0590522060001 SAC：S0590523080001 请务必阅读报告末页的重要声明 1 / 5 港股公司|公司点评 glzqdatemark2 2024年08月21日 华住集团-S(01179) 收入处于指引上限，上调全年开店目标 | --- | --- | |------------|-------------------| | 行 业： | 社会服务/酒店餐饮 | | 投资评级： ...

Investment Rating - Buy (Maintained) [1] Core Views - Q2 revenue slightly exceeded guidance with an 11.2% YoY growth, driven by the turnaround of overseas business DH, contributing to a net profit of RMB 1.067 billion, up 5% YoY [3] - Mainland business revenue grew 11.1% YoY, contributing RMB 1.033 billion in net profit, while DH segment revenue grew 11.6% YoY, turning a profit of RMB 34 million compared to a loss of RMB 174 million in the same period last year [3] - Adjusted EBITDA for Q2 was RMB 2 billion, up 11% YoY, and adjusted net profit was RMB 1.25 billion, up 17% YoY [3] - Mainland store openings exceeded expectations, with 10,150 stores by the end of Q2 2024, up 18% YoY, and a record high of 3,258 reserve stores [3] - RevPAR declined 2.4% YoY in Q2 due to a high base, with Q3 revenue growth guidance of 2-5% [3] - The company announced a USD 1 billion share repurchase plan over five years in July [3] Financial Forecasts and Valuation - Revenue is projected to grow from RMB 23.945 billion in 2024E to RMB 28.845 billion in 2026E, with a CAGR of 9.43% to 9.74% [2] - Net profit attributable to shareholders is forecasted to be RMB 3.702 billion in 2024E, RMB 4.068 billion in 2025E, and RMB 4.484 billion in 2026E [2] - EPS is expected to be RMB 1.15 in 2024E, RMB 1.27 in 2025E, and RMB 1.40 in 2026E [2] - P/E ratios are projected at 17.91x for 2024E, 16.30x for 2025E, and 14.79x for 2026E [2] Mainland Business Performance - Mainland store count reached 10,150 by Q2 2024, with 94% being franchised stores [3] - Q2 saw 567 new store openings and 466 net openings, with the full-year new store target revised upward from 1,800 to 2,200 [3] - Mainland room count reached 974,000, up 19% YoY, with franchised rooms accounting for 889,000, up 21.6% YoY [3] RevPAR and Revenue Guidance - Q2 RevPAR was RMB 244, down 2.4% YoY, with occupancy rate (OCC) at 82.6%, up 0.8 ppts YoY, and ADR at RMB 296, down 3.0% YoY [3] - Q3 revenue growth is guided at 2-5%, with RevPAR expected to decline by high single digits [3] Market Data - Closing price: HKD 22.55 [5] - 52-week low/high: HKD 20.80/HKD 36.30 [5] - P/B ratio: 5.75x [5] - Market cap: HKD 72.394 billion [5] Financial Ratios - ROIC: 16.32% in 2023A, projected to be 16.87% in 2024E [8] - ROE: 33.66% in 2023A, expected to decline to 18.38% by 2026E [8] - Gross margin: 34.46% in 2023A, projected to remain stable around 35.57-35.77% from 2024E to 2026E [8]

Hotel Operations and Performance - H World Group's total operating hotels reached 10,286, with 1,001,865 operating rooms as of June 30, 2024[2] - Legacy-Huazhu's occupancy rate in Q2 2024 was 82.6%, up from 81.8% in Q2 2023 and 77.2% in the previous quarter[5] - Legacy-Huazhu's blended RevPAR in Q2 2024 was RMB 244, compared to RMB 250 in Q2 2023 and RMB 216 in the previous quarter[5] - Same-store RevPAR for Legacy-Huazhu hotels operating for at least 18 months decreased by 3.6% YoY to RMB 248 in Q2 2024[5] - Legacy-DH operates 136 hotels with 27,552 rooms, including 16,789 leased rooms and 10,763 managed and franchised rooms as of June 30, 2024[6] - Legacy-DH's average daily rate (ADR) increased to €120 in Q2 2024, up from €117 in Q2 2023 and €104 in Q1 2024[6] - Legacy-DH's occupancy rate reached 68.3% in Q2 2024, compared to 67.1% in Q2 2023 and 55.8% in Q1 2024[6] - Legacy-DH's revenue per available room (RevPAR) was €82 in Q2 2024, up from €78 in Q2 2023 and €58 in Q1 2024[6] - The number of hotels in operation as of June 30, 2024, was 10,150, with a total of 974,313 rooms[38] - The company closed 101 hotels in Q2 2024, with 12 temporarily closed for brand upgrades or business model changes[39] - The company added a net of 466 hotels in Q2 2024, with 472 net additions from managed and franchised hotels[38] - Total number of hotels as of June 30, 2024, reached 10,150, with 3,266 hotels under development[40] - Average daily rate (ADR) for leased and owned hotels decreased by 2.2% year-over-year to RMB 375[40] - Occupancy rate for leased and owned hotels increased by 2.0 percentage points year-over-year to 85.6%[40] - Revenue per available room (RevPAR) for leased and owned hotels remained flat at RMB 321, showing a 0.1% year-over-year change[40] - Mature hotels (operating for over 18 months) saw a 3.6% year-over-year decline in RevPAR to RMB 248[42] - In Q2 2024, the company opened 5 new hotels and closed 2, resulting in a net increase of 3 hotels[43] - ADR in euros for leased hotels increased by 4.0% year-over-year to €124[45] - Occupancy rate in euros for leased hotels rose by 1.9 percentage points year-over-year to 71.2%[45] - RevPAR in euros for leased hotels grew by 6.8% year-over-year to €88[45] - The company's total hotel portfolio as of June 30, 2024, included 10,286 hotels with 1,001,865 rooms in operation and 3,294 hotels under development[47] - As of June 30, 2024, the company operates 5 Meilun Meixuan hotels and has 4 hotels under development in China[48] - As of June 30, 2024, the company operates 12 Steigenberger hotels and has 5 hotels under development in China[48] - As of June 30, 2024, the company operates 3 Steigenberger Grand hotels and has 1 hotel under development in China[48] Financial Performance and Metrics - Hotel turnover in Q2 2024 increased by 15.5% YoY to RMB 23.4 billion, with Legacy-Huazhu and Legacy-DH divisions growing by 16.2% and 7.8% respectively[2] - Q2 2024 revenue grew by 11.2% YoY to RMB 6.1 billion (USD 846 million), at the upper end of the previously announced guidance of 7% to 11% growth[2] - Net profit attributable to H World Group in Q2 2024 was RMB 1.1 billion (USD 147 million), compared to RMB 1.0 billion in Q2 2023 and RMB 659 million in the previous quarter[2] - Adjusted EBITDA (non-GAAP) for Q2 2024 was RMB 2.0 billion (USD 280 million), up from RMB 1.8 billion in Q2 2023 and RMB 1.4 billion in the previous quarter[3] - Total revenue for Q2 2024 was RMB 6.148 billion (USD 846 million), a 11.2% YoY increase and 16.5% QoQ growth[7] - Legacy-Huazhu's revenue in Q2 2024 was RMB 4.8 billion, a 11.1% YoY increase, driven by hotel network expansion[7] - Legacy-DH's revenue in Q2 2024 was RMB 1.3 billion, a 11.6% YoY increase, due to business recovery and network expansion[7] - Revenue from managed and franchised hotels in Q2 2024 was RMB 2.334 billion, a 25.8% YoY increase[8] - Hotel operating costs in Q2 2024 were RMB 3.731 billion, a 7.1% YoY increase, primarily due to hotel network expansion[10] - Legacy-Huazhu's hotel operating costs in Q2 2024 were RMB 2.7 billion, accounting for 56.7% of revenue, down from 58.9% in Q2 2023[10] - Sales and marketing expenses for Q2 2024 were RMB 317 million (USD 44 million), compared to RMB 262 million in Q2 2023 and RMB 260 million in the previous quarter[12] - Legacy-Huazhu's sales and marketing expenses in Q2 2024 were RMB 193 million, accounting for 4.0% of revenue, up from 3.5% in Q2 2023[12] - Legacy-DH's sales and marketing expenses in Q2 2024 were RMB 124 million, accounting for 9.4% of revenue, compared to 9.2% in Q2 2023[12] - General and administrative expenses for Q2 2024 were RMB 602 million (USD 83 million), up from RMB 477 million in Q2 2023[12] - Operating profit for Q2 2024 was RMB 1.6 billion (USD 216 million), compared to RMB 1.4 billion in Q2 2023[14] - Legacy-Huazhu's operating profit margin in Q2 2024 was 31.0%, slightly down from 31.1% in Q2 2023[14] - Legacy-DH's operating profit margin improved to 5.5% in Q2 2024 from 3.0% in Q2 2023[14] - Net profit attributable to Huazhu Group Limited for Q2 2024 was RMB 1.1 billion (USD 147 million), up from RMB 1.0 billion in Q2 2023[16] - Legacy-Huazhu's net profit attributable to Huazhu Group Limited for Q2 2024 was RMB 1.0 billion, compared to RMB 993 million in Q2 2023[16] - Legacy-DH's net profit attributable to Huazhu Group Limited for Q2 2024 was RMB 34 million, up from RMB 22 million in Q2 2023[16] - 2024 Q2 EBITDA (non-GAAP) was RMB 1.9 billion (USD 255 million), compared to RMB 1.7 billion in Q2 2023 and RMB 1.3 billion in the previous quarter[17] - 2024 H1 EBITDA (non-GAAP) was RMB 3.2 billion (USD 436 million), compared to RMB 3.4 billion in H1 2023[17] - 2024 Q2 adjusted EBITDA (non-GAAP) was RMB 2.0 billion (USD 280 million), compared to RMB 1.8 billion in Q2 2023 and RMB 1.4 billion in the previous quarter[17] - 2024 H1 adjusted EBITDA (non-GAAP) was RMB 3.5 billion (USD 476 million), compared to RMB 2.8 billion in H1 2023[18] - Total revenue for the six months ended June 30, 2024, reached RMB 11,426 million (USD 1,572 million), showing growth compared to the same period in 2023[30] - Operating profit for the six months ended June 30, 2024, was RMB 2,575 million (USD 354 million), reflecting an increase from the previous year[30] - Net profit attributable to Huazhu Group Limited for the six months ended June 30, 2024, was RMB 1,726 million (USD 238 million), compared to RMB 2,005 million in the same period last year[31] - Earnings per share (basic) for the six months ended June 30, 2024, was RMB 0.55 (USD 0.08), compared to RMB 0.63 in the same period last year[31] - Total comprehensive income attributable to Huazhu Group Limited for the six months ended June 30, 2024, was RMB 1,671 million (USD 231 million), compared to RMB 2,247 million in the same period last year[31] - Net profit attributable to Huazhu Group for Q2 2024 was RMB 1,067 million (USD 147 million), compared to RMB 1,015 million in Q2 2023[34] - Adjusted EBITDA for Q2 2024 was RMB 2,040 million (USD 280 million), a significant increase from RMB 1,772 million in Q2 2023[35] - Total revenue for Q2 2024 reached RMB 6,148 million, with Legacy-Huazhu contributing RMB 4,828 million and Legacy-DH contributing RMB 1,320 million[36] - Legacy-Huazhu's adjusted EBITDA for Q2 2024 was RMB 1,909 million, while Legacy-DH's adjusted EBITDA was RMB 131 million[36] - Leased and owned hotels generated revenue of RMB 2,395 million for Legacy-Huazhu and RMB 1,286 million for Legacy-DH in Q2 2024[36] - Total revenue under US GAAP was RMB 11,426 million, adjusted to RMB 11,424 million under IFRS[51] - Operating costs under US GAAP were RMB 9,026 million, adjusted to RMB 8,909 million under IFRS[51] - Operating profit under US GAAP was RMB 2,575 million, adjusted to RMB 2,689 million under IFRS[51] - Net profit attributable to Huazhu Group Limited under US GAAP was RMB 1,726 million, adjusted to RMB 864 million under IFRS[51] - Comprehensive profit attributable to Huazhu Group Limited under US GAAP was RMB 1,694 million, adjusted to RMB 904 million under IFRS[51] - Total operating costs and expenses amounted to RMB 7,473 million, with hotel operating costs being the largest component at RMB 6,076 million[52] - Net profit attributable to Huazhu Group Limited reached RMB 2,512 million, reflecting a strong financial performance[52] - The company reported a comprehensive profit of RMB 2,641 million, with a significant portion coming from fair value changes in convertible notes[52] - Interest expenses totaled RMB 923 million, influenced by lease adjustments and other factors[52] Cash Flow and Financial Position - 2024 Q2 operating cash inflow was RMB 2.2 billion (USD 307 million), while financing cash outflow was RMB 1.1 billion (USD 152 million)[18] - 2024 H1 operating cash inflow was RMB 3.1 billion (USD 430 million), compared to RMB 4.1 billion in H1 2023[18] - As of June 30, 2024, the company's cash and cash equivalents totaled RMB 7.8 billion (USD 1.1 billion), with restricted cash of RMB 364 million (USD 50 million)[18] - Operating cash flow for the six months ended June 30, 2024, was RMB 3,121 million (USD 430 million), a decrease from RMB 4,082 million in the same period last year[32] - Capital expenditures for the six months ended June 30, 2024, were RMB 484 million (USD 67 million), compared to RMB 393 million in the same period last year[32] - Net cash used in financing activities for the six months ended June 30, 2024, was RMB 3,363 million (USD 463 million), primarily due to debt repayments and share repurchases[33] - Cash and cash equivalents at the end of June 30, 2024, were RMB 8,165 million (USD 1,123 million), compared to RMB 7,836 million at the end of June 30, 2023[33] - Share repurchases for the six months ended June 30, 2024, amounted to RMB 676 million (USD 93 million)[33] - Debt repayments for the six months ended June 30, 2024, were RMB 429 million (USD 59 million)[33] Assets, Liabilities, and Equity - Total assets as of June 30, 2024, stood at RMB 62,452 million (USD 8,594 million), slightly lower than the RMB 63,532 million reported at the end of 2023[28] - Total liabilities decreased to RMB 49,735 million (USD 6,843 million) as of June 30, 2024, from RMB 51,283 million at the end of 2023[29] - Cash and cash equivalents increased to RMB 7,801 million (USD 1,073 million) as of June 30, 2024, up from RMB 6,946 million at the end of 2023[28] - Net accounts receivable decreased to RMB 1,112 million (USD 153 million) as of June 30, 2024, from RMB 2,189 million at the end of 2023[28] - Total equity increased to RMB 12,717 million (USD 1,751 million) as of June 30, 2024, compared to RMB 12,249 million at the end of 2023[29] - Total assets stood at RMB 61,022 million, with property and equipment net of depreciation at RMB 5,649 million[53] - Total liabilities were RMB 50,801 million, including long-term debt of RMB 5,438 million[53] - Operating lease right-of-use assets decreased to RMB 23,159 million due to adjustments and impairments[53] - Total equity attributable to Huazhu Group Limited was RMB 10,086 million, impacted by adjustments and impairments[53] - The company's retained earnings showed a deficit of RMB 363 million, reflecting various adjustments and impairments[53] - Total current assets were RMB 11,486 million, with other net current assets contributing RMB 887 million[53] - Total assets under US GAAP amounted to RMB 63,532 million, while under IFRS, it was RMB 62,533 million[54] - Property and equipment net value under US GAAP was RMB 6,097 million, adjusted to RMB 5,855 million under IFRS[54] - Operating lease right-of-use assets under US GAAP were RMB 25,658 million, adjusted to RMB 23,580 million under IFRS[54] - Long-term investments under US GAAP were RMB 2,564 million, adjusted to RMB 2,859 million under IFRS[54] - Total current liabilities under US GAAP were RMB 17,411 million, adjusted to RMB 17,327 million under IFRS[54] - Non-current operating lease liabilities under US GAAP were RMB 24,215 million, adjusted to RMB 24,727 million under IFRS[54] - Total liabilities under US GAAP were RMB 51,283 million, adjusted to RMB 52,038 million under IFRS[54] - Total equity under US GAAP was RMB 12,249 million, adjusted to RMB 10,495 million under IFRS[54] Non-GAAP Financial Measures - The company uses non-GAAP financial measures, including EBITDA and adjusted EBITDA, to evaluate performance, excluding equity incentive expenses, fair value changes in equity securities, foreign exchange gains/losses, and investment gains/losses[23][24] - EBITDA is considered a useful financial metric for evaluating operating and financial performance before the impact of financing and investment transactions and income taxes[23] - Adjusted EBITDA is used to assess the operating performance of the company's hotels, excluding items that may not reflect core operational results[23][24] - The company emphasizes that EBITDA and adjusted EBITDA are not substitutes for GAAP measures like net income or operating profit and should not be used in isolation for performance evaluation[25] - The company's non-GAAP financial measures are reconciled with GAAP financial measures in the appendix of the announcement[25] Shareholder Returns and Guidance - The company announced a three-year shareholder return plan with a total distribution of up to USD 2.0 billion, effective from July 23, 2024[19] - For 2024 Q3, the company expects revenue growth of 2% to 5% compared to Q3 2023, or 1% to 4% excluding DH[21] - The company raised its 2024 hotel opening guidance to over 2,200 hotels, up from the previous guidance of approximately 1,800 hotels[21] - H World expects Q3 2024 revenue growth of 2% to 5% YoY, or 1% to 4% excluding DH[3] - The company raised its 2024 hotel opening guidance to over 2,200 hotels, up from the previous guidance of approximately 1,800 hotels[3] Business Model and Strategy - The company operates 10,286 hotels with 1,001,865 operational rooms across 18 countries as of June 30, 2024[26] - 10% of the company's

Investment Rating - The report assigns an "Accumulate" rating for Huazhu Group, marking the first coverage of the company [6][16]. Core Views - Huazhu Group has established a competitive barrier through a combination of brand strength, technological innovation, and traffic management, positioning itself as a platform-based enterprise. The company has significant expansion potential both domestically and internationally, with a focus on middle and high-end markets [9][17]. Summary by Sections Company Overview - Huazhu Group, founded in 2005, has become one of the fastest-growing hotel groups globally, with a hotel count CAGR of 20.8% and revenue CAGR of 18.0% from 2013 to 2023. As of March 2024, the company operates 9,817 hotels with 955,700 rooms across 30+ brands in 18 countries [22][25]. Industry Update - The hotel industry is experiencing a cyclical recovery, with supply returning to pre-pandemic levels. By the end of 2023, the number of hotels in China had recovered to 96% of pre-pandemic levels, driven by sustained leisure demand and rational business travel recovery [9][59]. Core Advantages - Huazhu's competitive edge lies in its integrated approach of brand, technology, and traffic management. The company is well-positioned to capture market share as it continues to expand into smaller cities and enhance its brand portfolio through mergers and internal integration [9][14]. Key Highlights - The company is expected to achieve revenues of CNY 242.4 billion, CNY 261.2 billion, and CNY 281.1 billion for 2024, 2025, and 2026, respectively, with corresponding growth rates of 10.8%, 7.7%, and 7.6%. The net profit attributable to shareholders is projected to be CNY 42.5 billion, CNY 49.1 billion, and CNY 56.7 billion for the same years [16][12]. Financial Data and Valuation - The report anticipates a three-year CAGR of 8.7% for revenue and 11.6% for net profit, with price-to-earnings ratios of 16x, 14x, and 12x for the years 2024, 2025, and 2026, respectively [16][12]. Investment Focus - The report emphasizes Huazhu's ongoing expansion into lower-tier cities and its potential for upward brand migration, alongside a gradual internationalization strategy that is expected to enhance profitability [9][17].